A Firm Is Operating with an Optimal Combination of Inputs

question 185

Multiple Choice

A firm is operating with an optimal combination of inputs.Suddenly the price of one input rises.The firm should

• A)buy less of that input and more of the other input.
• B)change its input mix so that the marginal physical product of the input whose price has risen falls and the marginal physical product of the other input rises.
• C)buy less of whichever input now has the highest money price and more of the other input.
• D)reduce its output.

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